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The Eurozone is in worse shape than the US with Spain and Italy still on the brink of disaster and let's not forget Greece already in disaster.

On the US side we have Puerto Rico about to go belly up. The US government has secretly been feeding the Island Nation money hoping to prop it up but it's become apparent that there's not enough money to stop the disaster.

Bottom line. When some official tells you that we're at the end of this mess we're not even close. There's $18 Trillion in swaps that have not been settled that will need to be settled before we could even begin to talk about this being behind us.

There's growing global tension as each country suffers more and more many unable to feed their citizens due to hyper-inflation and then you have the constant printing of money by the countries that have central banks adding trillions to the economy that is causing hidden inflation to run rampant. Sizes of packages shrinking, prices going up all while the governments deny the existence of inflation.

The next crash and WW3 are on their way some think as soon as next year. I'd argue we're already in WW3 it's just that it's a very different war than WW2. The war now is about US policies around the world that cause starvation and poor standards of living and general oppression. The US is no longer the beacon around the world of a better life. People see the hypocrisy of our government. Older wars were more about theft of land by the people with the biggest weapons.

Creating indebted nations and households created technological change and higher living standards for all, it was a good idea and still is. But now it's time to take the corresponding step and find a way to reset so we can create another drive up in technology and living standards, to do it all again.
Solon's reforms created the conditions for classical Greece to emerge. The Black Death enabled capitalism to emerge. So we write off the debt and re-set the division of wealth and life chance to some sort of equality.
This is hard for those whose self interest and ego disallow the rationality of life's worth for its own sake, those whose intellect can't go beyond ideologies of us and them.
We don't have a long enough time frame before nature intervenes to spend generations in stuck in the stagnation of excess inequality. A meteor or yellowstone event could send us back to the neolithic or even wipe us out at any moment. If we are to evolve beyond this planet we are in a race against time. The sensibilities of the well heeled and their acolytes are irrelevant.

Countries such as Germany are worried that their costs will increase if the periphery nations fail to undertake deficit-reduction efforts, but those fears are based on ignorance and misunderstandings.

This is not an ordinary recession (based on economic mismanagement). It is a "balance sheet" recession.
Households in Ireland, Portugal, Spain and Italy have stopped borrowing, and have been paying down debt, in spite of the lowest interest rates in modern history.

But the fact is that al lof these countries -- with the possible exception of Greece -- have massive pools of private sector savings available to be borrowed. The pools are sufficient to finance their fiscal deficits -- as long as those savings can be channeled to their own government bond markets.

A sharp increase in private savings was behind the recessions in all four countries, and government borrowing have been too small to stabilize the economies by offsetting the drop in demand from private sector deleveraging.

That is because under the Maastricht Treaty, governments are permitted to borrow only up to 3 percent. This makes a certain amount of sense in an ordinary recession. But countries recognized as being in a balance sheet recession should not only be freed from that constraint , but should be encouraged, if not REQUIRED, to administer adequate fiscal stimulus.

As long as this private-sector deleveraging process continues, fiscal consolidation (austerity and structural reform) will only prolong the recession.

Whenever one reads Philippe Legrain one immediately understands why the president of the European Commission decided to do without him.

He is self-contradictory: One the one hand, he shares the German public's distaste for the QE and the weakening of the euro.

On the other hand, his recommendations are impracticable or pointless.

He wants the eurozone to clean up its banks. But, as Paul Krugman pointed out, zombie banks do no harm. They only cause trouble through forcing fire sales of assets if the governments declare they are going to do something against them. If you really need credit for a profitable investment, go to a bank that has money -there are enough of them.

How does one reduce the crushing overhang of private debt? That would be the philosopher's stone. Normal people are forced to retrench.

More investment? But businesses will only spend (and banks only lend) on investment they consider profitable. How does he solve that problem?

Eliminate barriers to enterprise - that's what the Euro countries have been trying to do for five years in Greece without success. Whose fault is that?

Tackle the deflationary drag of "German mercantilism." That proves he either doesn't know what mercantilism is or he doesn't know anything about German economic policy. There is not a trace of mercantilism there. German pupils are taught in school that mercantilism - i.e. the accumulation of currency (formerly gold and silver) in one country- is unproductive (and leads to inflation ,of which Germans are rightly shy).

If there is one single reason why one regards the author of the text with a bit of curiosity, it's exactly because Barroso didn't want to keep him as an adviser.
- If you'd knew Barroso achievements before he was, in a bizarre move, picked to chair the EU CO, then you'd understand. -

Zombie banks are indeed a huge problem. Not only they've been kept afloat after rogue business practices and all sorts of scams, as they continue to clutter the system and are an impediment to new entrants.

Until freedom, protection of human rights and rule of law are more than a joke in the south eurozone, discussing economy is sort of a waste of time. The South EZ needs real (that is, independent and professional) judiciary systems in place.... all else is drama.

How many countries have succeeded while swanked in corruption, fraud, croynism, dense violation of human rights, limited freedom, progressive castration of civil liberties and no rule of law ? None in recorded history.

The blame game is easy.
In addition to "clean up its banks, reduce the crushing overhang of mostly private debt, redress the huge shortfall in investment, eliminate barriers to enterprise, and tackle the deflationary drag of German mercantilism", they should also grow taller, smarter and better looking.
So how would you do that Mr. Unicorn?

Low inflation has been the trademark of the German Bundesbank for the last sixty years. Wages were increased according to increased productivity (but not more) and the monetary stability paid off as a social dividend for the average working class.

No, Germany does not have to take any lessons on monetary policy - especially not from Britain or France. These countries have always moaned about the "deflationary drag" imposed by the Bundesbank that hindered them from reducing their debt "overhang" with the printing press. Nothing new there - Germany should just ignore it and let countries that are not interested in monetary stability abandon the euro. And while the author dwells a lot on Spain he should not forget Britain where the debt level also reaches 100% of GDP and the deficit last year also was above 5%.

And in the case of Ireland, about 10% of the workforce has emigrated since 2008, mostly the youngest and most qualified (see for instance http://research.ie/intro_slide/research-funded-irish-research-council-irish-emigration-age-austerity).

Economies do have this stubborn idea of keep on growing, so what Europe is experiencing is that with the end of further austerity and generalized tax increases economies are adapting and starting to grow at the natural snail pace.

Like professor Krugman says, if you stop hitting your head with a baseball bat sometime in the future your head will stop hurting.

By the way, IMHO, the depreciation on the Euro is a confirmation of the European Growth problems. Markets don’t believe the Euroland will grow, and that’s why we are falling.

It’s not such bad news, and maybe a sign that Draghi policies are working, in the sense that he really created a scenario where people don’t believe Europe will recover, and where the Euro is no longer being looked like a reserve of value, that’s why unlike Japan and the US, the Euro is falling with QE. This will trigger inflation and give traction to monetary policy.

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